Colorado’s housing market underwent dramatic swings from 2018 through 2023, especially for budget-conscious homebuyers earning under $250,000 annually. This period saw a sustained run-up in home prices, a pandemic-fueled buying frenzy, and a sharp affordability crunch by 2022–2023 as interest rates climbed.
Overall Market Trends (2018–2023)
From 2018 to 2021, Colorado’s housing market was defined by rising sales and surging prices, followed by a marked cooldown in 2022–2023. The statewide median sale price roughly doubled over the decade leading up to 2020, reflecting a prolonged affordability challenge. Entering 2018, mortgage rates were around 4.5%, and the economy was robust – conditions that enabled many households under $250K income to pursue homeownership.
Pandemic Boom
The market’s trajectory changed suddenly in 2020. When COVID-19 hit, the Federal Reserve slashed interest rates to historic lows. By late 2020 and into 2021, 30-year mortgage rates dipped into the ~3% range, which supercharged buying power. Colorado saw a homebuying frenzy in 2020–2021. Statewide home sales hit record levels – for example, Denver-area sales in 2020 were 24% higher than 2019 as buyers flooded the market.
In mountain resort counties, sales volumes shattered records, with places like Pitkin County (Aspen) seeing monthly sales up 458% year-over-year in Sept 2020 amid an influx of remote workers and second-home seekers.
This wave of demand, combined with limited inventory, drove Colorado home prices to unprecedented heights. Statewide, the average single-family home price jumped from the mid-$300,000s in 2018–2019 to well over $500,000 by 2021. By the end of 2022, the median price was about $530,000 statewide (and ~$578,500 in Denver metro) – roughly a 0.5% uptick from late 2021, indicating that the double-digit annual price gains peaked in mid-2022 and then leveled off.
Interest Rate Whiplash and Cooldown
The frenzied pace began to break in the second half of 2022. The Federal Reserve’s fight against inflation sent mortgage rates soaring from ~3% in early 2022 to over 6% by late 2022 – the fastest increase in decades. This rate shock abruptly sidelined many buyers, especially in the under-$250K income bracket who are sensitive to monthly payment changes.
Colorado’s market shifted from red-hot to nearly frozen: new listings and sales plunged in late 2022 as both sellers and buyers grew wary. In December 2022, statewide single-family home sales were down ~40% year-over-year, and inventory crept up slightly (though remained low in absolute terms). Realtors described the late-2022 market as “volatile,” “unpredictable,” and “the year of change,” noting that many would-be buyers and sellers retreated to the sidelines amid rising rates.
By 2023, Colorado’s housing activity had reached a near standstill compared to the boom. Would-be buyers under the $250K income mark faced home prices that were 30–40% higher than just three years prior and interest rates around 6–7%, a double bind for affordability. It’s estimated that the typical mortgage payment in Colorado rose over 50% from 2018 to 2023 when combining price increases and rate hikes, effectively pricing out many middle-income families.
By late 2023 Colorado’s housing affordability index was at its worst level since the mid-2000s housing bubble. Even though home price appreciation stalled out in 2022–2023 (and even saw slight declines in some areas), the spike in financing costs meant the affordability crunch peaked – one index showed Colorado required around 1.66 average incomes to afford the median home in 2023, up from just 1.11 incomes in 2020.
Types of Properties Purchased
A key question for budget-conscious buyers is: what kind of home can they afford in Colorado? From 2018 to 2023, the vast majority of owner-occupied purchases by households under $250K were single-family homes, but condos and townhomes played an important role, especially for first-timers in pricier regions.
Statewide, single-family detached houses remained the default choice – Colorado’s housing stock is dominated by single-family homes, and culturally many families prefer a standalone house with a yard. Even under financial constraints, most buyers in this income range gravitated to single-family properties when possible.
Condominiums and Townhomes
In urban centers like Denver, Boulder, and Fort Collins, condos and townhomes provided relatively affordable entry points. For example, in 2018 the median condo price in the Denver/Aurora area was often $200K–$300K, substantially cheaper than single-family homes in those cities. This price gap made condos a popular choice for first-time buyers or downsizers who couldn’t comfortably reach the single-family market.
By 2023, condo prices had risen – Denver metro condos were around ~$415K median in late 2022 – but they still remained below the cost of a typical house. Notably, condo sales volume also surged during the 2020–2021 boom (when all property types were in high demand) and then cooled in 2022. Even as sales slowed, condo values held strong, indicating sustained demand for relatively affordable homes.
Townhomes offered a middle ground – often slightly more spacious than condos but still attached and typically cheaper than detached houses. In Colorado’s fast-growing suburbs, new townhome developments proliferated in the late 2010s to meet demand from young families and professionals. By 2022, the statewide median townhome price (~$415K) was nearly equal to condos, reflecting their popularity and newer stock.
Multi-Family Properties
A small subset of budget-conscious buyers turned to duplexes or fourplexes – effectively becoming owner-occupant landlords. Especially during times of ultra-low interest rates, some savvy first-time buyers used FHA or VA loans to buy a 2–4 unit property, live in one unit, and rent out the others for income. However, this is a niche: such purchases made up only a few percent of total sales.
Higher rates in 2022–2023 made this strategy less feasible (since the rental income might not offset the much larger mortgage payments), leading to a dip in these multi-unit purchases.
New Construction vs. Older Homes
In terms of the age/type of homes, many budget-conscious buyers ended up purchasing older resale homes rather than brand-new construction. New construction in Colorado often skews toward higher-end markets or larger homes, which can be out of reach for middle-income buyers. Thus, buyers under $250K income frequently bought homes built in past decades – albeit often updated – to stay within budget.
Despite the challenges, the fundamental preference for single-family living remained strong. Throughout 2018–2023, Colorado’s moderate-income buyers predominantly purchased detached houses when they could, with condos/townhomes serving as crucial alternatives in high-cost areas or for smaller households.
Upsizing, Downsizing, and Relocation Patterns
The 2018–2023 period saw Colorado households re-evaluating their housing needs – some upsized to larger homes, some downsized, and many relocated either within the state or from out of state.
Upsizing (Trade-Up Buyers)
In the late 2010s and especially 2020–2021, upsizing was a prominent trend. Homeowners who had built up equity saw an opportunity to sell and buy a bigger or better home, leveraging low interest rates. Many families earning under $250K – say a two-income household in the $150K range – found that with 3% mortgage rates, they could “trade up” from a starter home to a larger home without a massive jump in monthly payment.
These upsizers often sought features like an extra bedroom, a home office (a priority that grew during COVID), or a larger yard in the suburbs. For example, a family in a $350K home in 2018 might have upsized to a $500K home by 2021, funded by proceeds from their sale and cheap new financing.
By 2022, however, upsizing became much more difficult. The rapid rise in mortgage rates meant that even if someone sold their current home at a high price, their next home’s loan would carry a far higher interest rate. Many homeowners with sub-3% mortgages were reluctant to give that up – a phenomenon that led to “golden handcuffs” of low rates. As one Colorado REALTOR® observed, sellers didn’t want to list and “give up their low interest rate,” and buyers didn’t want to buy at high rates, leading to a market gridlock by late 2022.
In 2023, upsizing activity was minimal unless absolutely necessary; people stayed put if their current home sufficed, rather than incur a much bigger payment on a new purchase.
Downsizing
On the flip side, downsizing (moving to a smaller, more manageable home) has been a steady undercurrent. Older homeowners approaching retirement – often empty nesters – used the strong market of 2018–2021 to sell large family homes and downsize to condos or smaller houses. This was seen across Colorado, from Denver suburbs to smaller towns.
During the boom, downsizers benefited from easily finding buyers for their big homes (often at premium prices) and could then pay cash or take a small mortgage on a cheaper property. Even through 2022–2023, downsizers continued to be present, though some also held off selling due to interest rate concerns or wanting to wait out market volatility.
Relocation and Migration
Colorado has long been a state that attracts newcomers, and 2018–2023 saw significant relocation trends – both into Colorado and within Colorado:
Out-of-State In-Migration
Colorado gained many new residents (often with generous budgets) from higher-cost states like California, New York, and Illinois. Notably, after 2018 the cap on state and local tax deductions (SALT) in federal tax law provided extra incentive for some high earners to move from high-tax states to places like Colorado.
During 2020–2021, remote work enabled a wave of people to relocate for lifestyle reasons. Colorado’s mix of natural beauty, outdoor recreation, and relatively lower home prices than coastal metros was a huge draw. Urban-to-mountain migration was a hallmark of the pandemic: people from Denver (and out of state) bought homes in the Rockies en masse.
Resort towns like Vail, Telluride, Steamboat, and Summit County saw an influx of remote workers turning second homes into primary residences. This contributed to record sales volumes in those mountain communities in 2020 and pushed prices to stratospheric levels.
Within-State Moves
Affordability pressures led to migration within Colorado. As Denver-Boulder became very expensive, families under the $250K income threshold looked to relatively affordable Front Range cities and rural areas. El Paso County (Colorado Springs) and Weld County (Greeley) grew rapidly as they offered more home for the money.
For example, the average home price in El Paso County was around $445K in 2023, much lower than Denver’s ~$560K. Similarly, Weld County’s average (~$485K) was below adjacent counties. It’s no surprise these areas saw a lot of migration: remote workers or commuters willing to drive further could buy newer, larger homes in Colorado Springs or northern Colorado that would’ve been unattainable in Denver.
The Western Slope (e.g., Mesa County/Grand Junction) also saw inbound moves – its average home price (~$388K in 2023) was among the cheapest in the state. Grand Junction actually had some of the strongest percentage price growth over this period (e.g., +113% from 2013 to 2023 in Mesa County), indicating a lot of demand flowed there as it remained an affordability refuge.
Regional Housing Market Patterns
Homebuying trends in Colorado varied significantly by region. The state encompasses high-cost metro areas, booming suburbs, resort communities, and rural plains – each with its own market dynamics.
Denver Metro
The Denver metro is Colorado’s largest market and set the tone for statewide trends. It also became one of the least affordable areas. Home prices in Denver metro skyrocketed through 2021. The average Denver County home price leapt from about $235K in 2013 to $560K in 2023 (+138%) – with a hefty chunk of that increase happening in the late 2010s and early 2020s.
By 2023, even households earning $200K could struggle with the median-priced home, illustrating the affordability squeeze. For moderate-income buyers, this meant many turned to condos or outlying suburbs. Denver’s condo market grew – high-rise developments downtown and new condo complexes around light rail lines attracted younger buyers (albeit often at prices $300K+).
In the suburbs (Jefferson, Arapahoe, etc.), single-family homes remained the norm, but by 2022 it was nearly impossible to find a detached home under $400K along the Front Range. Inventory was chronically low – at times in 2021, Denver had barely 2-3 weeks of supply, bidding wars were routine, and homes sold in a median of under 1 week on market. This eased by late 2022, when days-on-market stretched to 2-3 months in some Denver-area segments.
Regionally, Boulder stood out as the priciest market: Boulder County’s median house price hit roughly $800K+ (City of Boulder around $1M). By end of 2022 Boulder’s prices had flattened (up just 1.9% YoY) after dropping in the second half, but affordability there was worst in state – many local buyers under $250K income had long since been priced out and either rent or moved to neighboring areas.
Front Range Cities
Outside Denver, other Front Range metros experienced similar trends on a slightly smaller scale. Colorado Springs (El Paso County) had a booming market – home prices there increased ~119% from 2013 to 2023. By early 2022, Colorado Springs was seeing record bidding wars too, and its median price briefly exceeded $450K. This drew some Denver telecommuters and also strained local buyers.
In 2022, as the market shifted, Colorado Springs actually saw a slight price decline (~2.2% drop in median by year-end 2022), one of the first areas in Colorado to see a rollback, as higher rates hit entry-level buyers there hard. Still, Springs remains relatively affordable by Colorado standards and continues to attract families (especially military families from the local bases using VA loans).
Fort Collins/Loveland (Larimer County) also saw steep gains – median prices in Fort Collins approached $550K by 2022. Larimer’s housing stock includes many single-family homes and some student-oriented condos (due to Colorado State University). The area’s appeal to both retirees and young professionals kept demand strong.
Greeley/Weld County became a hotspot as well – its proximity to Denver and availability of new construction at lower prices made it one of the fastest-growing areas. Weld’s average home price jumped to ~$485K (up 160% vs 2013). For moderate-income buyers, places like Greeley, Windsor, or smaller towns in Weld were often the only path to a newer affordable home during the peak frenzy.
Mountain Resort Counties
Colorado’s high country experienced an unprecedented real estate boom in 2020–2021, largely driven by wealthy second-home buyers and remote work relocators. This pushed median prices in resort towns to levels far beyond what local median incomes (<$100K) can afford.
For instance, Summit County (Breckenridge) saw its median price soar well over $1 million by 2022. Eagle County (Vail) and Pitkin County (Aspen) have long been in the multi-million-dollar range for single-family homes. These trends meant that for local working households under $250K, buying a home in their community became nearly impossible unless they had significant assets or were willing to purchase a condo or deed-restricted affordable unit.
Some locals bought in neighboring counties (e.g., commuting from Gypsum to Vail, or from outside Steamboat Springs proper). The pandemic surge eased in 2022: sales volumes dropped and some prices plateaued, but not to the benefit of affordability – rather, inventory dried up.
Mountain migration trends also had a notable twist: many buyers made these second homes primary residences (e.g., moving from Denver to live full-time in the mountains), which boosted school enrollment and year-round residency in some resorts but further tightened housing for locals.
Western Slope & Rural Areas
Western Colorado (west of the Continental Divide but outside the resort enclaves) and the Eastern Plains form Colorado’s more rural housing markets. Grand Junction/Mesa County on the Western Slope is worth highlighting: after the oil shale bust in the 1980s, Mesa’s housing was very cheap for decades.
But recent years saw substantial appreciation as retirees, remote workers, and some Front Range escapees bought there. Grand Junction’s median price was about $218K in 2017 and hit $288,000 by end of 2020; by 2023 it was likely in the mid-$300Ks. Even after these rises, Mesa County remained one of Colorado’s most affordable markets, which made it attractive for budget-conscious buyers – if one’s job or lifestyle allowed living there.
Similarly, Pueblo in southern Colorado had an average price of ~$287K in 2023 (the lowest in the state), and saw increased interest from Denver/Springs folks seeking cheaper homes. Pueblo’s prices roughly doubled from 2013 to 2023 but it still offers houses under $300K, something almost nonexistent north of there.
The Eastern Plains (smaller towns and agricultural communities) saw modest growth; places like Sterling, La Junta, etc., remain relatively low-cost markets with limited sales. They didn’t experience the wild swings of the Front Range, but they also have thinner demand. Rural regions often have older housing stock and fewer lenders/programs, which can be challenging for buyers even if prices are low.
Impact of Mortgage Rates and Financing
For any homebuyer, financing conditions can make or break the ability to purchase. This is especially true for moderate-income households, who rely on mortgages and are sensitive to interest rate changes.
Historic Low Rates (2019–2021)
In 2018, 30-year fixed mortgage rates hovered around 4.5–5%. By late 2019, rates had dipped under 4%, and then the pandemic stimulus pushed them even lower – bottoming out around 2.7–3.0% in late 2020/early 2021. For our under-$250K income buyers, this was like rocket fuel for affordability.
Lower rates mean lower monthly payments or the ability to qualify for a larger loan on the same income. For example, at a 3% rate, a $400,000 loan might have roughly the same monthly payment as a $300,000 loan at 6%. At 3%, the monthly payment on a median-priced home (~$400K) was ~$1,410; at 6%, it jumped to ~$2,010 – a difference of $600 per month.
In 2020–2021, those low rates allowed many renters to become homeowners: some who previously could only afford a condo could suddenly afford a small house with the same payment. Colorado’s housing affordability index improved to near record-best levels in 2020 despite rising prices, precisely because rates were so low.
Many buyers in this income range utilized FHA, VA, or other government-backed loans during the low-rate era. These programs offer low down payments and more flexible credit criteria, crucial for first-time buyers. With 3% mortgage rates, even these higher-risk loans had manageable payments. The result was a mini “homeownership boom” – Colorado’s homeownership rate rose to 65.9% in 2021 (up from 62.4% in 2016), suggesting more moderate-income folks achieved ownership during those years.
Interest Rate Spike (2022–2023)
The landscape changed in 2022. As inflation took off, the Fed’s rate hikes translated to mortgage rates above 5% by May 2022 and around 6–7% later that year. In 2023, rates averaged roughly 6.5% (with moments near 7%). This was a massive shock compared to what buyers had gotten used to.
The effect on purchasing power was dramatic: A household that could qualify for a $500K loan at 3% might only qualify for ~$350K at 6% due to higher debt-to-income payments. For Colorado, where median prices were $500K+, this meant many simply no longer qualified for the homes they wanted.
The housing affordability index plummeted – Colorado Association of REALTORS’ index hit all-time lows in late 2022, and another metric showed that by 2023 it took 1.66 median incomes to afford a median home, versus only 1.11 incomes in 2020.
Financing options tried to fill the gap: Down payment assistance programs (e.g., Colorado Housing Finance Authority’s grants/second loans) gained importance as buyers needed help with the larger down payments now required to keep monthly payments in check. Some buyers started using temporary buydowns (where the seller or builder subsidizes the rate for the first couple years).
One notable trend was the rise in cash buyers and large down payments in 2021–2022. By 2022, a record 26% of U.S. buyers paid all cash. Colorado saw many cash offers, often from investors or equity-rich Californians, which made it hard for regular financed buyers to compete.
For those under $250K income, paying cash is usually not an option, so they were sometimes edged out in bidding wars by cash or 50%-down competitors. The playing field shifted slightly in late 2022 when bidding wars cooled – sellers became willing to accept FHA/VA offers again and even offer concessions (by late 2022, over half of Denver-area sellers were offering concessions like rate buydowns or closing cost help to attract buyers).
Demographic Profile of Buyers
Who are the households buying homes in Colorado with incomes under $250,000? Several demographic trends emerged in 2018–2023:
Age and Household Composition
The typical first-time homebuyer’s age increased during this period. Nationally, the median age of first-time buyers rose to 36 in 2022 (up from around 32 in 2018). By 2023, it jumped further to 38. Colorado likely mirrors this trend. Many buyers in 2018–2021 were millennials finally entering homeownership in their late 20s to late 30s.
Married couples have traditionally been the largest group of homebuyers, and that remained true. In the 2020s, about 60-65% of buyers were married couples. Colorado, with many family-friendly areas, likely sees even a bit higher married share in some markets. Single women have been a growing segment – nationally ~20% of homebuyers in 2023 were single females, a share that has inched up.
Colorado’s homebuyer profiles showed a notable portion of single female buyers, often buying condos or townhomes. Single men made up around 8–10%, and unmarried couples ~6%. The prevalence of dual-income couples in Colorado’s expensive markets is high – often both partners work to afford the mortgage.
Many buyers under $250K income in Colorado are young families – often with one or two children – seeking suburban homes. However, one interesting trend is multigenerational buying. In 2022, a record 14% of U.S. home purchases were multigenerational (parents, adult kids, grandparents under one roof). By 2023, the NAR profile noted 17% of buyers purchased a multigenerational home (highest ever).
In Colorado, high housing costs have led some families to buy larger homes together or accommodate older relatives. This can help pool incomes to afford a nicer property.
Income and First-Time Buyers
A big chunk of buyers were in the roughly $75K–$150K household income range. The Colorado Futures Center noted that 47% of CO households earn $75K or less (as of 2021), and those folks have far fewer housing options. Indeed, a household earning the state median (around $80K) could barely afford a $300K home without exceeding the 30%-of-income affordability rule – and by 2023 there were very few $300K homes left in most areas.
Therefore, many buyers tended to be in the upper portion of our bracket, often dual earners. Common professions among these buyers included tech workers, healthcare professionals, teachers (often dual-teacher households), military personnel (especially in Colorado Springs), government employees, skilled trades, etc.
A major demographic shift was the decline in first-time buyer share by 2022–2023. Traditionally, first-timers account for ~40% of buyers. In 2021, they were around 34%. But in 2022 this fell to 26%, and in 2023 to just 24% – an all-time low. This indicates that the buyer pool skewed more towards repeat (existing) homeowners, who typically have higher incomes and more assets.
Colorado certainly saw fewer first-timers in 2022–2023, as they were squeezed out by affordability. The ones who did buy tended to be those with above-average incomes (e.g., young engineers or couples with combined six-figure incomes), or those receiving help (the “Bank of Mom and Dad” for down payments).
References
- Unpredictable Factors Deliver Record Setting 2020 Housing Market Across Colorado – Colorado Association of REALTORS®
- 2022: A year of change in real estate – Colorado Association of REALTORS®
- 2018 a Year of Contrasts Across Colorado Markets – Colorado Association of REALTORS®
- Coronavirus drives blistering sales of Colorado mountain homes, sets 2020 as historic high mark – The Colorado Sun
- Colorado Housing Affordability Report – Common Sense Institute (2023)
- Summary: Colorado Affordable Housing Crisis – Colorado Coalition for the Homeless
- Building Permits Slowing in Denver Faster Than Most Cities, but Picking up in Colorado Springs and Greeley – Colorado Association of REALTORS®
- House Advances ‘YIGBY’ Bill to Increase Housing Coloradans Can Afford – Colorado House Democrats News
- What’s Working: When Colorado’s tight labor market met the state’s housing affordability issue – The Colorado Sun
- First-Time Home Buyers Shrink to Historic Low of 24% as Buyer Age Hits Record High – National Association of REALTORS®
- Residential Rent Statistics for Denver Colorado – Department of Numbers
- Cities With the Largest Increase in Home Prices Over the Last Decade – Construction Coverage
- Homebuying Trends in Alaska (2018–2023) for Households Earning Under $250K – Home Stratosphere
- Homebuying Trends Among High-Income Households in Colorado in the Past 5 Years – Home Stratosphere
